TUPE: New rules are now in effect

Changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are now in effect for transfers taking place on or after 1 July 2024.

The new rules relating to TUPE allow businesses to consult directly with employees in certain circumstances (provided no representatives are in place), previously only applicable to micro-businesses, to all transfers involving fewer than 10 employees.

Duty to inform and consult

The purpose of TUPE is to protect employees in situations where the business they are employed by is changing hands or certain services are transferred to a new provider. These regulations impose specific duties on both the transferor (i.e. the seller of the business or the current provider of the services) and the transferee (i.e. the incoming business) to protect employees affected by the change. One of these duties is the obligation to elect employee representatives and to inform and consult with employees via those representatives. A failure to comply with this obligation exposes both the transferor and the transferee to pay compensation equivalent to up to 13 weeks’ uncapped pay per employee.

Micro-businesses exception extended

Previously, businesses with 10 or more employees had to elect employee representatives, while businesses with fewer than 10 employees could inform and consult directly with the affected employees, without having to elect representatives.

However, from 1 July 2024, the duty to consult with representatives will not apply where the transfer takes place on or after 1 July 2024, and where:

• businesses have fewer than 50 employees (up from 10); or
• businesses of any size are transferring fewer than 10 employees.

However, this exception only applies provided there are no recognised trade unions or elected representatives already in place. It is also important to note that the new rules are only applicable to transfers taking place on or after 1 July 2024.  Any transfers that occurred before this date, should have complied with the previous rules.

This long-awaited change is certainly welcomed by many employers, as it allows for a more streamlined process by enabling direct consultation with employees, especially in transfers involving a smaller number of employees.

If you have any questions or queries regarding the latest changes, please get in touch with our team of employment law experts.

Our Legal 500-rated employment law & business immigration team are experts in guiding businesses of all sizes and backgrounds through a range of issues that may arise, including those related to updated legislation.